JPMorgan Assigns Underweight Rating to Circle Amid Stablecoin Market Volatility
Wall Street powerhouse JPMorgan initiated coverage on Circle’s (CRCL) publicly traded USDC stablecoin business this week with an explicitly negative stance, assigning the security an “Underweight” rating and setting a $80 price target applicable by December 2026.
Led by equity research analyst Kenneth Worthington, the analysis was published Monday in JPMorgan’s “North America Equity Research” series and was reviewed by Cointelegraph. The paper declares CRCL stock a sell opportunity, representing a projected 55% downside from its current trading price of approximately $180, just below an intraday June high surpassing $290.
The investment bank’s price target is derived from a valuation methodology comprising a 45x multiple applied to projected 2027 earnings per share (EPS), augmented by a $10 buffer intended to capture potential upside not yet fully reflected in current pricing.
“Our price target reflects a substantial premium to the $31 IPO price,” the analysts noted, adding it importantly “also represents a substantial discount to the current share price of $180,” creating a complex valuation outlook.
Substantial Market Cap Reversal Anticipated
JPMorgan views Circle positively regarding its platform advantages within the emerging stablecoin market space, highlighting its pioneering role and diverse utility applications as key strengths. However, the bank contends the current market capitalization, which peaked significantly higher than its initial $8 billion NYSE valuation seen six weeks ago, may be overstated for the company’s present prospects.
According to market data provider CompaniesMarketCap, Circle currently boasts a valuation exceeding $43.8 billion. JPMorgan’s $80 price target translates into a projected market capitalization nearing $21 billion by year-end 2026—a substantial correction indicative of the bank’s bearishness, particularly given the paltry $31 initial public offering midpoint pricefive months ago.
Competition as Core Risk Factor
JPMorgan explicitly identifies competition as Circle’s primary existential threat. Spokespersons stated the landscape contains not only direct stablecoin rivals but also promising “tokenized deposit accounts and digital money market funds” capable of capturing user base rapidly, owing to inherently low switching costs for cryptocurrency platforms and services.
“We see competition as a potential threat to Circle,” Worthington and his team emphasized. The repeated risk assessment underscores concern that established players might eventually achieve “critical mass in a business with low switching costs,” thereby leveraging potentially superior global networks and an established banking relationship advantage held by Circle to capture significant incremental market share.
Navigating Regulatory Headwinds
The research also flags regulatory uncertainty as a material downside risk. Citing Europe’s Markets in Crypto-Assets (MiCA) framework as a potential precedent, JPMorgan speculates that analogous US stablecoin regulations could mandate higher capital reserves tied to outstanding USDC, creating financial pressure despite Circle possessing current sufficient equity backing.
Further broadening the liability horizon, analysts highlighted the macro threat posed by central bank digital currency (CBDC) development globally. Although the U.S. stance remains relatively “stablecoin-friendly,” the successful deployment of CBDCs in key international markets could fundamentally reshape the competitive environment for permissionless stablecoins like USDC, potentially constraining Circle’s global expansion ambitions.
“Further global CBDC adoption, particularly in Europe, could impact Circle’s ability to scale globally, adversely impacting long-term growth and profitability,” the analysts concluded.
